If future historians are forced to write about how the United States saw its standard of living, its freedom, and its rule of law slip away after the turn of the 21st century, they will have to devote considerable ink to the Obama Administration and its two showcase pieces of legislation. While Obamacare received more attention, the Wall Street Reform and Consumer Protection Act, also known as Dodd-Frank after its Senate and House sponsors, unfolded with less acclaim and less understanding. It unleashed a new regulatory body, the Consumer Financial Protection Bureau, to operate with unprecedented power.
Dodd-Frank became law in 2010 and is supposed to avert the next financial crisis. Yet banks are still too big to fail and Fannie Mae and Freddie Mac remain wards of the state, while the CFPB has been given sweeping authority over consumer credit and other financial products and services that played no significant role in the crisis of 2008.
Presidential adviser Elizabeth Warren, now running for the U.S. Senate from Massachusetts, designed the CFPB to stand in the market between business and its customers. It’s in a perfect zone to attract inexperienced idealists and anti-capitalist ideologues, and is likely to be a job-killer for the real economy.